More withdrawals frozen by exchanges as the crypto winter continues to bite.
Welcome to The Daily Forkast June 24th, 2022.
I'm Joel Flynn with the latest on what's happening on the blockchain.
And it's not good news for crypto consumers as COIN Flex and Voyager Digital join the
growing list of struggling firms.
Let's get you up to speed on that and everything else from Asia to the world.
Join thousands of NFT traders who already start their day on CryptoSlam.
CoinFlex and Voyager Digital then are the latest crypto exchanges to either limit or
halt withdrawals.
CoinFLEX announced overnight it was freezing withdrawals over extreme market conditions
and uncertainty.
Concerns continue to mount about Voyager Digital, which has slashed its daily withdrawal limit.
That's just after it warned about its exposure to the potential insolvency of Three Arrows
Capital.
So is this the future for the financial freedom crypto originally promised?
Forkast's Monika Ghosh has more.
Liquidity issues continue to hound the crypto space.
In a blog post, CoinFLEX stressed the counterparty cited as a reason for the freeze was not the
crypto hedge fund Three Arrows Capital, also known as 3AC, which is reportedly at risk
of insolvency.
The exchange said it will halt perpetual and spot trading in its FLEX coin in the short
term.
Withdrawal functionality is estimated to return on June 30th.
The firm declined to comment for this story.
CoinFLEX is a sponsor of Forkast.
Meanwhile, a day after Voyager Digital disclosed its exposure to 3AC, the crypto trading platform
slashed its daily withdrawal limit from US$25,000 to US$10,000.
On Wednesday, Voyager said that it had loaned over US$650 million worth of USDC and Bitcoin
to 3AC, which the latter might be unable to pay back.
CoinFLEX and Voyager Digital join a growing list of crypto service providers including
Celsius network, Babel Finance and FinBox to limit or halt withdrawals.
Crypto had been heralded as the dawn of financial freedom for all, but with accounts frozen
on multiple platforms, those dreams seem to be in tatters.
But Ben Caselin of crypto exchange AAX told Forkast that decentralization exists along
a spectrum and people need to be aware of what they are involved in.
He added that it's easy to present a project as decentralized, but there can be interventions
that are telltale signs it is not.
Meanwhile, Giles Crouch of business consultancy firm NordsPark told Forkast that decentralization
can fail even if it's done right.
Crouch explained that in every case with crypto, someone or a few end up controlling the digital
asset, making the business model at odds with the ideals.
Next Saponaro of Blockchain Platform Divi Project says there's only one way to avoid
being caught out, and that's to take back control.
He says it's vital to move self custodial products and services.
For Forkast, I'm Monika Ghosh.
The crypto crackdown in China continues apace.
Cryptocurrencies have been listed as a means of laundering drug money for the first time
there.
According to a drug crime report released on Thursday, police solved 5,000 trafficking
cases involving online transactions last year.
It claimed the funds from drug deals had been moving from online bank transfers into crypto
and in-game currencies.
The report comes amid growing anti crypto rhetoric in China.
Authorities there are also pushing forward with the country's own central bank digital
currency.
Head to Forkast.News for the latest on what's happening in China and with its CBDC.
Crypto retail investors in Singapore are heading for the exits.
That's according to the country's exchanges.
Two of the biggest have been telling Forkast about big shifts in the city state's market.
It comes just a day after the city state's regulator vowed to be unrelentingly hard on
crypto.
Forkast's Pradipta Mukherjee has the details.
Most crypto exchanges in Singapore had primarily focused on retail traders until now.
The recent Terra Luna collapse, liquidity crunch and pauses on withdrawals by crypto
exchanges have dealt a severe blow to investor confidence.
Added to that, the Monetary Authority of Singapore, or MAS, has consistently warned the public
against trading in crypto, while Singapore's deputy prime minister said last month the
asset class is a highly risky area.
CoinHako, which is one of the few crypto exchanges in Singapore to have a full license, allowing
it to provide digital payment token services, told Forkast a pivot is underway.
We anticipate the recent drawdowns in the current bear market to have especially hit
retail investors.
But institutions who may have been sitting on the sidelines might see this as an opportune
moment to come and to get some exposure.
So we're generally hopeful about institutional participation going forward.
Hong Qi Yu, founder of Tokenize Exchange, told Forkast that while it had seen increases
in both retail and institutional investor numbers over the past years, that has now
shifted.
Hong expects the number of retail users to fall from 80% of the total last year to 50%
in the next 18 months.
While Singapore has gone full steam ahead with discouraging retail investment, doors
are opening institutionally.
The mask kicked off Project Guardian in May, working in conjunction with major financial
institutions on testing, asset tokenization and DeFi while managing risks.
Henry Chong, the CEO of Malaysia and Hong Kong based Securities Exchange Fusang, said
he hopes there will be a healthier mix of retail and institutional players in future
and that he's already seeing a higher level of involvement and interest from institutional
investors in Singapore.
However, control over the industry remains tight.
Speaking to the Financial Times on Thursday, MAS Chief FinTech Officer Sopnendu Mohanty
said Singapore will be brutal and unrelentingly hard on any bad behavior in the crypto industry.
Just 14 full licenses and in-principle approvals have been granted to exchanges so far in Singapore.
Roughly 100 more exchanges are currently waiting for licenses, with some operating under an
exemption while their applications are scrutinized for Forkast.
I'm Pradipta Mukherjee.
Could rule changes coming to Japan be about to help boost the crypto sector there?
That is the focus of the latest edition of Word on the Block due out on Monday.
In it, Forkast's editor in chief Angie Lau.
speaks to the CEO of B2C to Phillip Gillespie about Japanese crypto regulations and how
crypto is moving to legacy institutions.
In Japan right now, we are pushing this new product called DDAI.
So what is this?
It's a it's a yield enhanced derivatives products.
Usually these these are referred to in ethics world as a kind of a dual currency deposits
or other kind of.
It's a familiar product for a lot of these larger institutions.
What you do is imagine you have Bitcoin and imagine you don't really want to sell.
Well, what you can do is you can send a bitcoin to your local broker and the coin then gets
passed to B2C2 and we sell an option on top to enhance the yield.
So this is a yield enhancement product which is safe, regulated, and it's completely different
from DeFi and three or four years ago.
The regulatory landscape wasn't clear.
The institutions didn't really know.
Can we offer this product?
Can we not now, especially in Japan with FSA.
They're warming up to the idea and they've approved with some of the counterparties to
go ahead and start trading these products.
It's a big difference.
The full episode airs on Monday.
Make sure you check that out.
All right.
That is the latest from Asia to the world.
There is, of course, more on our website, Forkast.News, and on our Twitter @Forkast_News.
Until next week, I'm Forkast Joel Flynn.
Have a great weekend.
Bye bye.